It saves face for the entrepreneur to say, "I sold my company to Google." The professors found that the majority of acqui-hired companies couldn't have raised another round of funding. Taking a "buy out" offer sounds a lot better than having the company go out of business.

It eases the tension of offering people huge salaries to come work at your company. If Facebook tried to hire some of the people at Hot Potato, it would have to make a generous offer. If it led to the new Hot Potato employee making more money than the current Facebook employees, the office culture could be poisoned. But, if Facebook brings in employees through an acqui-hire, and essentially gives them a huge bonus to join, what can it do? It has to tell its people, "We had to buy their equity."

That equity bonus is better for tax purposes. Engineers can treat their bonuses as capital gains, which is more tax-friendly. Though, the UNC professors believe this might not last if the IRS starts paying attention.

Acqui-hiring is good for big companies because it keeps VCs happy. If Google had the choice between poaching a startups employees, and robbing a VC of the ability to say it had an exit, or just doing the acqui-hire, the acqui-hire is better in the long run. It might end up costing a little more, but it keeps VCs happy, and down the road the VCs might be able to help out Google.